Oil Prices could hit $125 to $150 a barrel in 2011, here's how you can profit!

World oil demand has been increasing pretty rapidly. The International Energy Agency estimates that world oil demand is currently at a rate of about 88.2 million barrels per day. That is over 1,000 barrels per second! Think about that... Combine an already tight oil supply with the crisis in Egypt and you can easily see why oil is inching its way back to the $100 a barrel level. The price of oil rose 26.5% in 2010 and should see another major advance in 2011... This will be driven (literally) by Chinese oil demand. China's auto sales exploded by 34.5% in 2010 to reach 14.6 million vehicles and could see sales north of 18 million units this year. Keep in mind, that 7 out of 10 people (70%) in the United States own cars. In Europe that number is 5 out of 10 (50%). In China, only 30 out of 1,000 own cars – that is less than 3% of the population! This figure is expected to rise by 900% or more. America is addicted to oil Currently, America is the world's largest consumer of oil. We guzzle more than 7.1 billion barrels per year. More than half of this is imported. Additionally, we know that more than 80% of the world's discovered and useable oil reserves come from many countries that don't particularly like the U.S. such as Iraq, Kuwait, and Saudi Arabia (to name a few). What do higher prices mean? Higher oil prices affect not only the price of gasoline for our cars, but this also affects everything from food prices to travel to shipping goods. Millions of average American families, whose budgets are already stretched thin, could see another crushing blow. The fact is powerful forces are lining up that could trigger parabolic moves in select oil stocks in the next 12 to 18 months. And these forces won't just affect the oil drillers and producers. They will affect you; perhaps even totally change your life. Last time oil prices shot over $100 a barrel, we saw the price of gas reach $4 a gallon. We saw our heating bills soar, and every day food prices sharply increase. This is happening again for reasons other than oil, but the rising price of oil is certainly a factor. If prices continue rising at this pace, it could bring our economic recovery to a screeching halt! How we prepare now could be the difference between barely surviving and thriving. There are a few ways to capitalize on this trend and potentially make money while others lose their shirt. How to plan ahead Let's look at seven ways you can potentially make or save money as the price of oil rises. 1. Invest in a commodity exchange- traded fund. Exchange traded funds for commodities are like index funds that track the price of one or more commodities. A couple of examples include tickers USO and OIL. 2. Use less oil. Sounds harsh but if we drive less, use mass transit, buy a fuel- efficient car, and improve energy efficiency in your home, we can all save money guaranteed. It may take time to break-even, but I believe higher oil prices are here to stay for a while. 3. Look at top oilfield-services players such as Schlumberger Ltd. SLB, Halliburton Co. HAL and Baker Hughes Inc. BHI. 4. Look at energy market leaders like ExxonMobil Corp. XOM, Chevron Corp. CVX and even the outcast, BP PLC (NYSE ADR: BP) 5. Look at alternative energy companies like First Solar (ticker FSLR) or Cree Inc. (ticker CREE) 6. Look at oil transportation companies. These include companies that own pipelines (such as Constellation Energy in the United States) or oil tanker firms such as Frontline Ltd. and Nordic American Tankers (Bermuda). 7. Lastly if you are more speculative you can look at the commodity futures market and buy futures on oil. Crude oil is a commodity and futures are traded on the commodities market. This is more risky as often there are margin requirements which can expose you to higher levels of risk. These are just seven ways to profit and there are many, many more. At Faith-Based Investor, this month we added Exxon Mobil (XOM), First Solar (FSLR), and JA Solar (JASO) to a few of our portfolios. We continue to hold other energy companies. We believe that 2011 will see a sharp increase in oil prices and we are positioning appropriately. Is it the end of the world? As you can see, rising oil prices can very well affect the price of life as we know it: from transportation, traveling, food, heating costs, and many other goods. If prices do hit the $125 to $150 that is being predicted, it's not the end of the world. However, it's prudent to plan ahead!